[phkahler]

>> the monthly cost of housing hasn’t changed as a percentage of take home pay,

That is by design. Banks figure your monthly payment as a percent of income. Then based on interest rates they figure out how much you can borrow. Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it. This is why lower interest rate cause higher house prices.

Interest rates are going up. Home prices have slowed. Speculation is over. Still waiting for the drop. The economy seems to have gotten really good at moving ahead in spite of pressure to slow. I fear there may be built up negative pressure that's about to give. Not sure though.

[sokoloff]

> Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it.

Of course those groups urge you to spend the maximum: they're all being compensated if you do exactly that.

At the end of the day, it's still you who is signing the contracts, responsible for how you spend your money, and has to live with the outcome of your decisions.

[californical]

Sure, personal responsibility still matters in an individual level… but that’s irrelevant to the point you’re replying to! I’m not sure of your point.

If those groups can convince a decent percent of people to spend the max that they can get away with, it doesn’t matter what you do personally. Prices will inflate because most others are still spending big.

[sokoloff]

It most certainly matters what you do personally. What that might mean in consequence is that you decide to buy a cheaper house than you could maximally afford, put a greater percent down, or you might delay buying a house for a while.

The differences among households' incomes are already higher than the reasonable ratio between the max approvable to borrow and the sensible amount to borrow. (A household making $300K can already sensibly borrow more than one making $100K can be approved for and one making $100K can sensibly borrow more than someone making $30K can be approved for.)

Households are still competing with others to buy individual properties, of course. That competition doesn't mean that you should YOLO it with the largest purchase most people will ever make just because others are willing to do so.

[yucky]

   > Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it.

You are not forced to spend above your ability to pay. People used to be ok with buying smaller homes, or in less hip neighborhoods. If you can afford a $500k house you can also afford a $350k house. People need to stop making excuses for living above their means.

[Izkata]

> If you can afford a $500k house you can also afford a $350k house.

Those numbers seem insanely high to me. I would've thought people are looking for more like $100k.

[llampx]

Inflation has been really insane for the last few years, driven by cheap money from the Central Banks. Asset prices have been going parabolic.

[imtringued]

You won't find houses for $100k unless they are in poor condition or a bad location. That is roughly the price you would expect to pay for an average condominium in Germany.

[Izkata]

Yeah, that's what I mean - not what houses are selling for, but what people are looking for/able to buy. Median income in the US is somewhere around 40k-70k/year depending on the source, and the general recommendation is not to exceed 2.5x that for the price of a home - so around 100k-175k.

[yucky]

Yes, as shown elsewhere on this thread, thousands of those types of houses are available in countless metro areas around the US. They're just not in San Fran or LA or Seattle so people don't want to take advantage of it. They must think jobs only exists in like 5 cities. Or really they just don't think it sounds cool to say they live in Kansas City or Dallas or whatever.

[johnchristopher]

Or maybe living close to friends and family matters more ? Moving 2000km away from family and friends is an uprooting move.

[jasonwatkinspdx]

You are ignoring the reality many are facing, where essentially all the available options are above their means.

Back in the late 80s Elizabeth Warren and coauthors showed that the most common reason American families went bankrupt was because their high housing costs were an attempt to get their kids into better schools.

The blunt truth is the 20 major metro areas are where nearly all the high income jobs are, so we've seen a decades long pattern of migration towards them. This is a huge underlying force in so much of US economics, politics, and culture. At the same time, these metro areas have not come close to matching demand with increased housing supply.

The result is increasingly people facing the dilemma where the best economic option for their family is for them to spend 3+ hours of their day commuting to an urban core from an outlying area they can just barely afford to rent in. And god help you if your kid gets sick or your car gets totaled. This is the reality for most working class Americans. It's not a matter of them living above what they can afford, it's about our society becoming so broken many people will never reach a threshold of affording anything like middle class prosperity.

And I am entirely out of patience for folks that earn tech industry money while moralizing about how poverty is just people overspending in some purely hedonistic stupid way.

[ac29]

>The result is increasingly people facing the dilemma where the best economic option for their family is for them to spend 3+ hours of their day commuting to an urban core from an outlying area they can just barely afford to rent in. And god help you if your kid gets sick or your car gets totaled. This is the reality for most working class Americans.

The average commute time for Americans in 2019 (pre-pandemic) was 27.6 minutes each way: https://www.census.gov/newsroom/press-releases/2021/one-way-...

Yes, there are supercommuters out there with very long commutes, but saying 3+ hours a day describes "most" Americans simply isnt true.

[yucky]

   > You are ignoring the reality many are facing, where essentially all the available options are above their means.

Again, this just simply isn't true. Go to Zillow, and set your filter to houses under say $150k and check the metro areas of Kansas City, St Louis, Dallas, Little Rock, Memphis, Cleveland, Charlotte, Detroit, Milwaukee, Pittsburgh, Cincy, etc. etc. and you will get hundreds of hits in every one of those metro areas. These are not rural communities, millions of people live and work in these and other metropolitan areas.

People who say this are convinced they need to move to SF/LA/NYC/Boston/Seattle. Yes, real estate is prohibitively expensive in San Francisco, we get it. So don't move there.

[dchristian]

The bottom end of the housing market is usually junk or otherwise tied up legally. Just because you get hits, doesn't mean that's a viable option.

I just did a housing search recently and found this out the hard way.

Look at the median for an area and then figure that you can go 10-20% below that for a "fixer upper". Even that isn't an option if you don't have DIY skills.

[yucky]

See above, and try it yourself. On a $150k house a first time buyer can use FHA to put 3% down, and if FHA approved the sale then by definition it is not a fixer upper.

That means a first time buyer can get into a $150k house with FHA for $4,500 down and $1,300/month (which includes property tax and home insurance).

This means someone making $25/hour can afford to buy one of these homes, right now, today.

[imtringued]

>Then everyone - the sellers, the agents, even the bank - push you to borrow the max allowed and spend it.

That only applies if housing demand exceeds supply because buyers are competing. When sellers compete they try to reduce the price to cost plus profit where the profit is no lower than 3-5% because at some point other industries pay more.